One of the driving forces behind this phenomena is that business types value having that reoccurring revenue on the books more than “normal” revenue. If you have two companies with identical revenue but one of them gets it from customers locked in on a subscription, that company will be valued significantly higher. If you’re an exec or a big investor who owns a lot of stock in a company then you’re effectively incentivized to push the company towards that subscription based reoccurring revenue model because it will boost the stock price and make you richer.
I was talking about this with my friend the other day. I was looking for car insurance right. I went to Geico and I was just about ready to lock in to a plan for 1000$. I had a question I needed answered so I went to support. What I got was a worthless chatbot that ended up costing Geico my business. I was so displeased I ended up going to progressive.
But that begs the question: do Geico executives make more money off the increased stock valuation that comes from implementing a chatbot despite losing my real, cash business?
Easy to measure (support manpower costs) vs hard to measure (business lost due to bad support).
Good engineering (and old fashioned business practices) would try to better measure the hard to measure stuff (for example using surveys).
Modern MBA business practices just uses the easy to measure stuff as guidelines and doesn’t even try to measure the rest, possibly because “if we don’t officially know it then I can’t be blamed for it”.
Mind you, maybe they’re right since most consumers get shafted and still keep on coming back for more.
One of the driving forces behind this phenomena is that business types value having that reoccurring revenue on the books more than “normal” revenue. If you have two companies with identical revenue but one of them gets it from customers locked in on a subscription, that company will be valued significantly higher. If you’re an exec or a big investor who owns a lot of stock in a company then you’re effectively incentivized to push the company towards that subscription based reoccurring revenue model because it will boost the stock price and make you richer.
I was talking about this with my friend the other day. I was looking for car insurance right. I went to Geico and I was just about ready to lock in to a plan for 1000$. I had a question I needed answered so I went to support. What I got was a worthless chatbot that ended up costing Geico my business. I was so displeased I ended up going to progressive.
But that begs the question: do Geico executives make more money off the increased stock valuation that comes from implementing a chatbot despite losing my real, cash business?
Easy to measure (support manpower costs) vs hard to measure (business lost due to bad support).
Good engineering (and old fashioned business practices) would try to better measure the hard to measure stuff (for example using surveys).
Modern MBA business practices just uses the easy to measure stuff as guidelines and doesn’t even try to measure the rest, possibly because “if we don’t officially know it then I can’t be blamed for it”.
Mind you, maybe they’re right since most consumers get shafted and still keep on coming back for more.